AirDNA Market Overview for May 2022

[Robin Simon]

Really interesting market overview article from AirDNA came out a couple of weeks ago, curious to see everyone's thoughts on some of the data.  Some excerpts and my comments in bold

https://www.airdna.co/blog/air...

Highlights:

-Available listings reached 1.34 million, up 24.7% YOY (+11.8% vs. 2019)
-Demand is up 17.9% YOY (+26.1% vs. 2019)
-Occupancy was down 8.6% YOY to 60.2% (+8.6% vs. 2019)
-Average daily rates (ADRs) are up 4.6% YOY (+31.5% vs. 2019)
-Revenue is 23.3% higher YOY (+65.8% vs. 2019)

Still looks like a very healthy industry, my greatest concern as a lender remains those who are new to the market and doing their first or second listings and don't have the experience per se of the "good times" of the last 2 years and may not be able to weather a bit of a slowdown or rough waters.  Think there may be some huge opportunities though for liquid, professional, experienced investors to scoop up properties soon if these first timers throw in the towel.  Wonder how much of the 1.34 million of 24.7% YOY new listings are newbies vs. pros

Hottest Markets for Net Increased Listings

-Scottsdale, Houston, Miami, Austin, LA, Panama City, Atlanta, Ft. Lauderdale, Gatlinburg, Las Vegas

Certainly no surprises in there for me except maybe seeing Houston and LA so high up (maybe due more to just overall stock/pop).  Do ya'll think these markets are saturated or still opportunity?  I think the biggest question facing STR investors will be to identify what the "hot markets" will be on these sorts of lists a year from now

"Average daily rates increased by 4.6% YOY in May, averaging $263.75 for the month. This was the lowest YOY increase since April 2020 and was significantly lower than the 11.3% increase last month"

Even with this "Bad News" always good to remember that they are INCREASING not decreasing, just at a slower pace

Of the largest 50 short-term rental markets, ADRs grew the most in Destin, FL (+29.4%) followed by Santa Rosa/Rosemary Beach, FL (+28.9%) and Maui, HI (+22.7%). Other notable markets with high growth include New York, NY (+19.1%), Boston, MA (+18.7%), and Chicago, IL (+15.1%), all of which were in the top 10 markets for fastest-growing ADRs over the past year.

Interested and surprised to see NY and Chicago here

Thoughts, agreements, disagreements, other takeaways?

[Jared Higginbotham]

in my market (Tampa) we’ve added over 1k new listings in the last 60 days bringing our total to right around 4,500 active listings. These are mostly new purchases that have incredibly high overhead.

RevPAR is on the decline as hosts and managers are standing firm on the higher rates. Consumers continue to eat into their savings and spend on credit cards as real wages are declining. All of these indicators show me that our guests are tapping out. Shoulder season occupancy is lower YoY. Increased inventory and a maxed out consumer will lead to nightly rate declines.

I foresee all the new additions to the STR inventory failing as they will not meet their monthly overhead requirements. The second half of this year we will see panic followed by price drops, and eventually malinvestments will either be converted to LTR's or sold. We will not see a repeat of 2021's STR boom.

Lower your prices for the second half of the year and capture as much occupancy as you can in order to save your RevPAR. Let the excess malinvestment listings drop off the market, and iron out your processes for shorter 3-4 night stays. Grit your teeth and muscle through this. I’m avoiding adding new listings at this time unless they are non-financed properties that can withstand this sudden drop in pricing power. If the consumer is suffering, we will suffer. That’s how this business works.